Counteroffers

Should you accept your boss’s counteroffer to stay at the organization? In this episode of HBR’s advice podcast, Dear HBR:, cohosts Alison Beard and Dan McGinn answer your questions with the help of Leigh Thompson, a negotiations professor at Kellogg School of Management at Northwestern University. They talk through what to do when you’re presented with a counteroffer, you’re considering what you would need to stay at your company, or you want to use a job offer to get a raise.

Listen to more episodes and find out how to subscribe on the Dear HBR: page. Email your questions about your workplace dilemmas to Dan and Alison at dearhbr@hbr.org.

From Alison and Dan’s reading list for this episode:

HBR: If You’re About to Take a New Job, Should You Consider Your Boss’s Counteroffer? by Kelly O. Kay and Michael Cullen — “In a recent national survey we conducted about best practices in resignation, nearly 40% of senior executives and HR leaders alike agreed that accepting a counteroffer from a current employer will adversely affect one’s career. Nevertheless, some 78% of senior executives and 80% of HR leaders indicated that it is sometimes acceptable to embrace a counteroffer.”

Book: The Mind and Heart of the Negotiator by Leigh Thompson — “Before you begin negotiating or contemplating a counteroffer, determine who in the company has the ability to negotiate. Generally, those persons higher up in the organization are the ones who negotiate and the ones who care most about hiring good people. You should be well-versed about the advantages and disadvantages of negotiating with an intermediary, such as a human resources manager.”

HBR: Why People Quit Their Jobs — “Researchers agree that preemptive intervention is a better way to deal with employees’ wandering eyes than waiting for someone to get an offer and then making a counteroffer. CEB’s data shows that 50% of employees who accept a counteroffer leave within 12 months.”

HBR: When the Competition Is Trying to Poach Your Top Employee by Rebecca Knight — “On the surface, presenting your employee with a counteroffer seems like an obvious, easy way to make them stay. But, warns Sullivan, counteroffers are often counterproductive. ‘If someone has made the decision to quit, they’re unhappy. By giving a counteroffer, you’re paying to keep an unhappy worker.’”

ALISON BEARD: And I’m Alison Beard. Work can be frustrating but it doesn’t have to be. We don’t need to let the conflict get us down.

DAN MCGINN: That’s where Dear HBR: comes in. We take your questions, look at the research, talk to the experts, and help you move forward.

ALISON BEARD: Today we’re talking about counteroffers with Leigh Thompson. She’s a professor at Kellogg School of Management at Northwestern University. She’s also the author of the book, “The Truth About Negotiations.” Leigh, thanks so much for coming on the show.

LEIGH THOMPSON: Very happy to be here. Thank you.

ALISON BEARD: In your classes on negotiation, how often do job offers and counteroffers come up?

LEIGH THOMPSON: Oh, about once every ten minutes.

DAN MCGINN: Now the letters we have today are from people who all have a job and are thinking about moving and thinking about the counteroffer situation. Among your MBA students who don’t have jobs, do you find them even trying to leverage one offer against the other?

LEIGH THOMPSON: Yeah, the lucky one will have more than one job offer. I mean, typically when they have more than one job offer, then they really have the position of power – is it Door #1 or Door #2?

ALISON BEARD: And you think that expectation that people will negotiate applies to people who have been with companies for a long time? If they have the ability to go outside, get another offer, create an interesting opportunity for themselves that they would take –

LEIGH THOMPSON: Right.

ALISON BEARD: That’s okay?

ALISON BEARD: Well, if I’m a company owner or a manager or somebody’s boss, the last thing I want somebody doing is taking the hours and days and weeks that I know it takes to go outside and leverage another outside offer just so that they can get remuneration. Now does that happen? Of course it does.

DAN MCGINN: Dear HBR: Last month I had my annual performance review. It was a blockbuster year for my output but my company’s compensation committee rewarded me with only a pat on the head and a, keep up the good work. This gave me a sour taste. I’d been with my company for nine years. I decided to look around for any other opportunities. One job caught my eye. It’s a huge promotion in responsibility, job title, and pay. It would also reunite me with a former mentor. I got the offer and put in my notice at work. My manager and CEO were unhappy. After many back-and-forth discussions, they came back to me with a counteroffer. I know the traditional thinking that you shouldn’t accept a counteroffer because down the road, you’ll just go back to feeling unappreciated, but they let me essentially write my own job description. It also came with a huge raise and a higher performance bonus. Am I crazy for wanting to stick around? My work-life balance is great. I enjoy my colleagues. If I stay, I’ll be getting paid a lot more to do the kind of work I’m excited about but the advice against counteroffers keeps reverberating in my mind. If I accept this counteroffer, will I come to regret it?

LEIGH THOMPSON: This is a good one. What led to the resentment; it was that pat on the head without the money behind it so this listener points to some really key intangibles in his present job. He loves the people he works with, he has good work-life balance and great pay with this counteroffer. Lots of people don’t have this key triumvirate. so let’s just remind ourselves that this is a really good situation. Number two – nine years? Wow! There’s a lot of history here. The fact that he’s been here nine years means something is working. Okay, so somebody screwed up in year nine, right? And they failed you and then this guy skipped an important step. He came back and he said, here’s my notice. The critical step was to say, look, I’ve gotten an outside job offer. I really love it. I love the people I work with. I’m wondering whether you want to respond?

ALISON BEARD: And you think that approach would have been more effective because his current employer might have felt less threatened or –

LEIGH THOMPSON: Absolutely.

ALISON BEARD: Okay.

LEIGH THOMPSON: To go and get an outside offer and then walk back in the office and say, here are my resignation papers, put that company into an, oh my gosh, we’ve got a chicken game now. Right? This guy’s driving off the cliff; we’re going to respond.

DAN MCGINN: Leigh, the traditional wisdom, he says, is don’t take a counteroffer. Why do people believe that? Why is that the wisdom?

LEIGH THOMPSON: Can I question that? I would not endorse traditional thinking is to not accept a counteroffer from one’s company because I call that the chasing-the-rainbow effect. I wonder whether the new job is going to be falling short on some of those dimensions. Maybe, you know, the rainbow is not out there.

DAN MCGINN: So I think we have published research in HBR that suggests 50% of people who take a counteroffer end up leaving the firm within the next year anyway and by the time somebody goes through all the hoops you have to do to go out and find a job, interview, get the offer; that they’ve already kind of mentally made the leap and broken their bond with the firm and you’re essentially – they’re going to leave at some point anyway once the counteroffer is out there.

LEIGH THOMPSON: I’m also thinking of the famous principle of cognitive dissonance meaning that once I’ve gone out and spent hours and hours and time, you know, preparing my resume, getting another job offer, to not go ahead and walk into the future makes it seem like, well that was a giant waste of time.

ALISON BEARD: And we did publish a piece from Heidrick & Struggles. It was a survey of senior executives and HR leaders, and 40% of them said that they thought someone who accepted a counteroffer would see their career negatively affected mainly because of that diminished trust with the immediate boss, with the organization; basically, people feel blackmailed.

DAN MCGINN: Yeah, there are firms out there that have blanket policies, we don’t make counteroffers ever to anybody exactly to prevent this problem. They think that if you get another offer from another company; congratulations, good for you, good luck, we don’t want to talk any further.

LEIGH THOMPSON: So the firms that are saying, we won’t respond, are trying to prevent, in some sense, this bidding war type of mentality because if word gets around my company that the only way of having attractive raises is to go out and generate counteroffers, then I’m incentivizing that type of behavior. I think from the employee’s point of view, it’s more of a relationship thing like, oh my God, now that I’m in some sense expressed unhappiness, you know, how can we ever, you know, how can we ever love and trust each other again.

ALISON BEARD: The good news is for our letter writer the company doesn’t seem to feel that the relationship has been breached, you know, they want him to stay. They’ve made him an amazing offer.

DAN MCGINN: I’m optimistic about his situation if he does take the counteroffer because it seems like the only real problem he was suffering at the current job was compensation and that’s a pretty easy problem to fix. When I get concerned about somebody trying to leverage an offer is when they don’t like their boss and they want more vacation time and they’d like to be doing more fulfilling kinds of work. You want to accept it on the terms that are on the table and not sort of these soft promises that, oh six months from now we’ll have changed this, that, and the other thing. It’s really hard to hold people to that. So the fact that this is all in black and white and it’s mostly about the number makes me think that this could work.

ALISON BEARD: I completely agree with you, Dan. I mean, I’ve certainly watched friends and colleagues use counteroffers to get what they need in their jobs whether it is more responsibility or higher pay, a larger bonus, and stay with their companies for a very long time and be very happy afterwards.

LEIGH THOMPSON: And when I read his letter, he says, my company’s compensation committee was the group who made him upset, so the compensation committee, who knows, maybe it’s a bunch of bureaucrats, it didn’t sound like his boss.

ALISON BEARD: Yeah, and it seems like his manager and even the CEO of the company really, really want him to stay.

LEIGH THOMPSON: Right. They dropped everything and they responded. And I think that there’s enough history here – I mean, this is a decade – there’s enough history here that they can get through this rough spot together. And I don’t read anything in his letter saying, oh, now I’m worried that, you know, I’ve made my bed and, you know – I don’t think that that’s the concern. I think that he’s thinking that maybe he’s going to be in the same situation in the future. I kind of doubt it just because –

ALISON BEARD: They’re giving him a huge raise.

LEIGH THOMPSON: They’re giving him a huge raise and he’s shown them, you know – I can leave and I just handed you my resignation papers and they said, hold the phone.

DAN MCGINN: If we assume he’s going to take the counteroffer, what should he tell his former mentor, who he almost went to work for, about why he’s not going to take that job?

LEIGH THOMPSON: I think what he should tell the former mentor is that this was the hardest decision I’ve ever made. I quite frankly don’t know if I’ve made the right decision. I’m a guy in there for the long-term. I’ve built a relationship with my current company and they responded in a very heartfelt way and I felt that this was the right thing to do. That doesn’t mean you and I can’t, you know – who knows what the future will bring and I’m so deeply appreciative that you gave me this opportunity.

ALISON BEARD: That’s – almost this exact situation happened to a friend of mine and the mentor did understand. When he tells his company that he is going to stay with them, is there anything extra he should do to smooth over the relationship, assure them that he’s not going to make this a pattern?

LEIGH THOMPSON: Just exactly that. I think he should say, look, I am so deeply appreciative of how fast you responded and that means the world to me. And then I think he should reiterate; I love this company, I love the people, I love the work, I love the responsibility and in some sense maybe he’ll say, you know, I acted quickly because, you know, I just – I was a little bit hurt from the events that had played out. We’re all good now and I am really looking forward to working on this next year’s project, we have a lot of great stuff going on, and you have my heart and soul.

ALISON BEARD: Great. So Dan, what’s our advice?

DAN MCGINN: We think this is a relatively easy call. We think he should take the counteroffer and stay in a job where he is mostly happy. The real issue here was the pay and the counteroffer fixed that. So we don’t think the listener did everything perfectly here. Number one, it might have been worth having a direct conversation with the boss before he went out job hunting to tell him that he was upset about the compensation committee’s low raise. That would have saved everybody a lot of time and aggravation. Number two, instead of actually resigning from his job and giving notice, he should have told the company, hey, I have an outside offer, would you like to make a counter? We think the trick at this point is to have an honest and heartfelt conversation with the former mentor who made you the offer about why you’re not going to take it and then have a very appreciative and optimistic conversation with your current employer, accept the counteroffer, enjoy the huge new responsibilities and the big pay raise, and let’s hope it all goes well.

ALISON BEARD: Okay, let’s go to the second question. Dear HBR: I’ve been with my current employer for more than seven years. Unfortunately, I’ve had six different managers during that time. My company continues to change and might eventually get sold to another firm. I love the people I work with. I still feel connected to the organization but I’m tired of all the shuffles and constantly trying to prove myself, so I decided to look for different opportunities. I got a nice offer from another company, a good bump in salary, and a next level title. I told my current employer. I also explained what I wanted to see in a counteroffer; namely, I’d like to manage people and I want to move to a different company function. I know for sure the bosses there would support me and value my contributions. It seems like they’re working hard to get it approved, but now I’m having second thoughts. The job offer I have is good too. I’m torn over whether to stay with my company or go with the new one. Was this the right strategy? I want to make a good decision. What should I do?

LEIGH THOMPSON: Well, I can hear her frustration. Six managers in seven years, constantly trying to prove yourself. And then this person did what a lot of us would do; she went into what I call fight-and-flight mode. I didn’t say fight or flight; I said fight and flight mode. So the first thing she did was she went out and got a BATNA; good for her. Right? A BATNA is your best alternative to a negotiated agreement. It’s what you and I would call your plan B. So she did the strategic thing, you know – negotiation 101 says, go out and get a BATNA; it’s your key source of power. I kind of keyed in on the way she – on what she did when she got her BATNA. She came back and it sounds like – I mean this is my visual – she threw her briefcase on the table and said, if you make a counteroffer, it has to contain X, Y, and Z.

DAN MCGINN: See, I thought she was being very straight forward and honest and efficient.

LEIGH THOMPSON: Here was the way I read it. This is her – I’ve informed them of my offer and told them what I want if they were to counter. That sounded a little bit demanding to me and here’s the problem, the company is quickly scrambling to do X, Y, and Z. If they walk into her office tonight and say, we did it, I think that there is an implicit contract here that she would say, thank you so much, and here she’s saying, maybe I’ll take it and maybe I won’t. My advice would be, don’t throw your briefcase down on the table and make a list of demands unless you’re going to accept those if they offer it to you because, to me, that’s what’s called bargaining in bad faith.

ALISON BEARD: So she made a big negotiating mistake in that she doesn’t really know if – even if they agree to all her demands – she’ll stay with the company, and also she made a declaration rather than it being a discussion and possibly could have leveraged this offer into something bigger and better.

LEIGH THOMPSON: Absolutely. So I think she should have gone in and said; you know what, here’s what’s going on with me, I’ve gotten an outside offer, I don’t know what my inclinations are right now, I want to keep you in the loop, Of course, I would be very receptive to receiving a counteroffer if you were inclined to make it, and then pause. And I think that they would say; oh my gosh, what can we do, thank you for asking. Here’s what’s really coming to mind; I want to be managing people, I‘d like to be working in this function, those are the things I care about.

DAN MCGINN: Can she even trust a counteroffer from a company where the managers change so frequently? What if the person who makes the counteroffer is gone next week?

LEIGH THOMPSON: Well, here’s my feeling on that, and I tell this to all my students; I know it’s the age of the internet but you need something in writing. I just coached a young man the other week who said, oh, you know, I got this offer. And I said, was it on the phone? Yeah, yeah, yeah. And I said, what you need to do is say; I’m so excited to have gotten this offer, I’m absolutely thrilled, I can’t wait to see it in writing.

ALISON BEARD: But even if the offer is in writing and the company is sold a year from now, all bets are off. Right? Things change.

LEIGH THOMPSON: Well, yeah. Here’s my feeling about that though. So, you know, life is probabilistic so I think what she needs to do is get out an Excel sheet and figure out what dimensions does she care about; you know: pay, function, managing people, salary, bonus, etcetera.

DAN MCGINN: Yeah, I struggled with this question because this company seems so poorly managed and so much disorganized, not positive change going on, that I think she should have probably – no matter what the counteroffer is – I think she should probably leave.

LEIGH THOMPSON: Well, but I think it’s kind of a hard call to make. We don’t know anything about door number two except it’s another company with a higher salary. We don’t know whether it’s a much more stable company, we don’t know if it’s populated with people who she really feels a connection with, and so I always worry about opening door number two. I don’t want to ever have people leave a job, you know, to run away. I’d rather have you run toward something that’s better on all dimensions. I would say; get out that Excel sheet, figure out all the dimensions that make, you know, life worth living for you when it comes to a company and create a scorecard and if you’re missing some information, call the other company. They’re currently in love with you, they’ve made you an offer, you haven’t accepted it, you’re at the height of your power. Figure out, you know, all those dimensions that maybe you don’t have a lot of information on. How long has the current manager been in their role? And if they’re having just as much turnover and chaos, well, it would be good information to know. Interview – you know, ask to spend a half a day there. Go out to lunch with some of the people you’ll be working with. They’ll start to talk.

DAN MCGINN: So due diligence.

LEIGH THOMPSON: Absolutely. I would never tell her to take that other company because there’s too many unknowns.

ALISON BEARD: So it sounds as if – just like our first letter writer – this woman moved a little too quickly.

LEIGH THOMPSON: Yeah, and when people move quickly, that’s usually a result of when they’ve been hurt or when they feel underappreciated, and then we go into fight or flight or fight and flight mode. I’ll show you.

DAN MCGINN: Leigh, let’s say the counteroffer meets every demand that our listener has made. She still wants to leave. What does she do?

LEIGH THOMPSON: Well, first of all, she shouldn’t let it get to that point. If she even thinks for one minute that she wants to leave, even if they meet all of her demands, she should be calling and setting up a meeting right now to say; you know what, this is turning out to be a much more difficult decision than I anticipated, I don’t want you running around doing a lot of work when I think that this other company is a better fit. So the only problem comes if they’re literally making her an offer tonight and she hasn’t set up that meeting. Given that they’re still “working hard”, she shouldn’t be sitting passively. She should be saying, you know what, I’ve got an update since our last discussion.

ALISON BEARD: But if she does get the offer – they beat her to the punch – she might just have to do what’s best for her personally and burn that bridge?

LEIGH THOMPSON: Well, what I would do is I would do everything to not have the bridge come down. Thank you so much, I can’t believe how responsive you were, this has been the toughest decision of my life, I know that you worked hard to do this, I’ve got a complex situation, some other variables have come up, this is very difficult and I’m going to need to leave and I am so deeply appreciative of your responsiveness. She needs to crawl at that point.

DAN MCGINN: Alison, what’s your takeaway?

ALISON BEARD: Given the instability of the company and all the shuffling of managers, we do think that she’s been smart to get an outside offer, but we think that she’s made a few mistakes in presenting it to her current employer. First, by issuing demands, she might have damaged the relationships with her boss and the company and also limited her options in terms of what they’re going to give her. Second, I think she’s put herself in a really tight spot because if they tick all the boxes, she might feel obligated to say yes . So we think that while she’s waiting, she should do her due diligence. She should make a scorecard for both offers and both companies and figure out what she really wants to do. If she has any doubts that she wants to stay should all of those boxes be ticked, she really needs to let the company know now that the situation is more complex than she had thought. It’s possible the counteroffer isn’t coming or won’t be where she wants it. In that case, the decision might be easy. If she decides that she does really love her company and they’re going to meet all her demands, she could certainly take it while understanding that, given all the dynamics, there is a risk they won’t be able to make good on those promises.

DAN MCGINN: Dear HBR: I work at a growing internet video startup owned by a big telecom company. I joined right as it launched and I’ve learned a lot. I’m a key member of the core team. My boss and teammates value me and I get a lot of praise for my work. When I joined the company, I worked to define my role. Now I’m the strategy and analytics manager. I really enjoy what I do. It’s my passion. However, I’m heavily underpaid, even though I’ve been one of the top performers for the past two years. I brought this up with my boss several times. He’s the country head. He’s been saying that he’ll ask his boss, the regional head; however, after waiting for almost a year, there’s been no raise. Even if I do get one, it’s likely to be around 3% to 5% based on inflation. There’s a colleague inside our company with similar responsibility who is making 40% more than me. I have a good relationship with the regional head and I was thinking of going to her directly but that could backfire. We’re operating in an Asian culture where it’s not normal to deal with your boss’s boss, so I’m thinking about exploring opportunities at other companies. My hope is that if I receive an offer, I can use it to try to negotiate a counteroffer. I think my company will want to keep me, but getting an outside offer takes time. It’s not easy to find roles I really like, especially since I realize I need to be prepared to actually move if my company doesn’t counter. Part of me recognizes that I’m fortunate. I have a job I like at a growing business in a growing industry. The only problem is the salary. Is trying to get an outside offer and then a counteroffer the best way to fix it?

LEIGH THOMPSON: Well, this is a very interesting situation. So let’s go to the plus column. The plus column is that this man has a good relationship with the regional head who seems to have a lot of power. The second thing in the plus column is that this is a person who is demonstrating a great deal of perspective taking and cultural intelligence. Now let’s go to the minus column. This person lacks a BATNA, best alternative to a negotiated agreement. Moreover, he is suffering from what we call BATNA fatigue. In other words, he’s saying, I know that if I went out and generated another offer, that would give me leverage but it’s going to take me a lot of time and effort to do that.

ALISON BEARD: But that’s not the only way to determine your market value. Right? There are many other ways that he could do that.

LEIGH THOMPSON: I agree. I remember one time I felt that I was underpaid and I thought; well this is classic, here I am a negotiation professor and I’m in my own darn jam. So I went to my boss and I said, now look, here’s what I know about the facts. I could go out and generate a counteroffer. I think that would take time and I’m worried that I could fall in love and I don’t want to fall in love because I love where I’m at with you. So I’m coming to you to kind of share what’s on my mind and see what can be done. And in my case, within two weeks, I got a nice response raise. The reason why I point that out is that that was the kind of conversation that I think that employers and employees can have who have a long basis of trust. Before we go out and get the counteroffer and then come back and hand somebody the resignation papers, there’s all kinds of conversations that we can have.

DAN MCGINN: One of the things I respected about him is that he recognizes that if he goes out and gets an offer, he needs to be prepared to actually take that job if he doesn’t get a counteroffer or if the counteroffer is not good enough. I think that one of the mistakes people make – you know, we’ve talked a lot about, oh you need a BATNA, you need a BATNA – well, if you go out and you get an offer from a company that you really wouldn’t want to work for that isn’t all that exciting to you and then you use it to try to get a counteroffer and the counteroffer doesn’t come, well at that point, you’re kind of stuck. You’re going to have to join an organization you really don’t want to be a part of. And I think that happens more than people estimate because they get so focused on this idea that an outside offer will give them leverage. It only gives you leverage if you can actually envision moving into that role.

LEIGH THOMPSON: Absolutely. My advice isn’t to drop everything and go out and, you know, get a BATNA. My advice is actually to figure out how to have another conversation with the boss who has ignored him for one year and say; you know what, I haven’t gone away, I really love this company, I know you’re a busy person but I really need to have this conversation.

ALISON BEARD: And should he tell the boss that he’d like to speak to the regional head about it?

LEIGH THOMPSON: I think what he should do is tell the boss he understands he’s a busy person and that he is more than happy to speak to the regional head but would really only like to do that if the boss recommends that as a good strategy. In other words, I think he needs to compliment his boss on being a busy person but very gently say, I’m not going away so let’s brainstorm on this together. I think if he talks to the regional head, it’s going to get back to the boss and that’s going to create some discord.

ALISON BEARD: Yeah.

DAN MCGINN: Yeah, I agree. There’s only risk in that approach. I just don’t see a great case to be made. Even if his boss is the problem and is blocking the progress on this front, I think the risks of trying to jump around the boss with this skip level conversation, in any culture, the risks outweigh the rewards.

ALISON BEARD: I guess I’m optimistic that he could possibly do so with permission.

LEIGH THOMPSON: I’m thinking that too.

ALISON BEARD: Yeah.

DAN MCGINN: Yeah, with permission, a totally different scenario but he’s been looking at just the jump around strategy.

LEIGH THOMPSON: And we don’t know whether the current boss is just kind of an absent-minded busy person or whether he’s – or he’s deliberately avoiding our listener.

ALISON BEARD: It’s interesting because this letter writer, while he doesn’t have an offer yet, is almost in the best position of all of the people that we’ve discussed today. He hasn’t made any of the mistakes yet. You know, he hasn’t threatened his employer by getting a counteroffer, he hasn’t given anyone an ultimatum. He’s sort of starting from scratch, and it made me think of a Reid Hoffman piece that we wrote about giving your boss and your employer the right to the first conversation. Before you do go out and do anything, you say; I’m going to have an in-depth talk with you about the things here that are making me happy but also that are making me really unhappy and I’m going to give you every opportunity – both my direct manager and maybe also the regional head – to fix it so that we can work together well.

DAN MCGINN: It actually reminded me of a different piece. It reminded me of a piece by Patty McCord from Netflix. She says you should always be talking about other jobs with other people that – you know, we tend to think about a job search as this giant on/off switch that we turn and that it’s going to take tons and tons of work to go out there. I have friends that do this, you know, they’re very active on LinkedIn, they’re visible, they kind of make it known that you know, hey, I’m happy to talk to anybody about anything anytime. They have a very good sense of their market value. They reject this idea that it’s like climbing Mount Everest to go out there and get a job offer. It can happen fairly easily, depending on what your skill set and what industry you’re in.

ALISON BEARD: So you think that he should do it – go out and get a counteroffer from someone else, even if it’s a nebulous one?

LEIGH THOMPSON: I actually don’t. I think it’s worth having the conversation again. I mean, when I – I had my own story when I realized I was underpaid.

ALISON BEARD: What more can he do to make his case though? Because obviously, the initial discussions with the boss didn’t go anywhere. So what are some strategies, tactics to ensure that the boss really listens this time?

LEIGH THOMPSON: I’m focusing on his interesting sentence; I also know that my colleague, with similar responsibility, is getting 40% more than me. So I want to know about this colleague and I would want to put that up as a data point when I’m talking with my boss.

DAN MCGINN: I think bosses are pretty adept at batting that argument down. They’ll say; number one, your information isn’t totally correct about what that person makes and number two, there are six other people who have the same responsibilities and you’re actually paid more than a couple of them, so there’s a whole range of salaries. It seems like bosses can sort of deflect those comparisons somewhat easily.

LEIGH THOMPSON: And I agree with you. And it could be that this is a classic case of the – what we call the egocentric bias. We tend to pick out the data point that is most, you know, relevant for our own case and then we start to feel inequities around that.

ALISON BEARD: So the conversation should really be more about the value that he’s bringing to the company and why he deserves to be compensated for it.

LEIGH THOMPSON: Absolutely. If he hasn’t talked to his boss in a year about his status and his position, I think it’s worth a 15-minute conversation before he then goes out and tries to generate an outside offer which, maybe in the second conversation, that will be the best course of action.

DAN MCGINN: One of the questions that has been on my mind for all three of these letters is how does the organization typically respond? Is this an organization that reflexively makes counter offers? Is this an organization that likes paying people below market value until their hand is forced by somebody who threatens to resign? The way I think about it, that should be a big variable in how you proceed.

LEIGH THOMPSON: I think that’s true. I think if you’re a high performer in an organization, they’ll bend over backward to be responsive. I think in some organizations if you’re not a high performer, this is what they want to have happen. Great, let’s just not pay this guy and then when he complains, just say, well take it elsewhere. So I think we’ve got to give organizations a little bit more credit for being a little bit more discretionary in how they respond to counteroffers.

ALISON BEARD: I do wonder though, you know, he’s thought about the implications of the Asian culture with regard to doing this skip level meeting, but has he thought about how an Asian culture regards counteroffers? You know, Asian societies can be quite collectivist and sort of reject this, out for myself mentality of using leverage to get what you want.

LEIGH THOMPSON: They’re collectivists but, at the same time, there’s tons of hierarchy which means we’re all here for each other but those of us who are in the position of power have a responsibility to take care of those below us. So I think that the magic thing to do to be culturally sensitive is to say, I want to be in a position where I can continue to nurture and take care of the people, products, services that our company provides so that I can make sure that I am bringing value to everything that I am here protecting and growing.

ALISON BEARD: So Dan, what are we telling him?

DAN MCGINN: We like the fact that he’s proceeding slowly here. He has a good relationship with his boss. He shows awareness of the cultural context of the company. He shows awareness that, if he does go out and get another offer, he needs to be prepared to actually go to the company, to that job in order to make use of it as a point of leverage. We don’t think it’s that time yet. We think he should be talking more directly with his boss and, if he gets permission from the boss, with his skip level boss; demonstrate the fact that he’s a high performer, demonstrate whatever intelligence he has about what his market value really is. We think those would all be smart steps to take before you invest the time to try to go out and get this BATNA. The reality is he likes his job and getting another offer can be a point of leverage, but it’s not always going to get you what you want. And in this case, we think he’s got a few more things he needs to do before he gets seriously out into the job market.

DAN MCGINN: Thanks to the listeners who wrote us with their questions. Now we want to know your questions. Send us an email with your workplace challenge and how we can help. The email address is DearHBR@HBR.org.